Modi ushers new era in economy

ReutersA hero's welcome awaited Narendra Modi in New Delhi on Saturday after the Bharatiya Janata Party thundered to victory in India's election, trouncing the ruling Nehru-Gandhi dynasty. Photo: Reuters

New Delhi - Narendra Modi declared a new era in India after his opposition bloc secured the biggest election win in 30 years, with voters tired of sluggish economic growth and corruption, handing the Gandhi-Nehru dynasty a historic defeat.

The Bharatiya Janata Party (BJP) and its allies won 336 of 543 seats, more than the 272 needed for a majority, Election Commission data showed.

President Jacob Zumacongratulated Modi on Saturday on his election victory, the International Relations and Co-operation Department said, Sapa reports.

“With India under the leadership of Mr Modi, the government of South Africa looks forward to consolidating the strong bilateral political and economic relations that exist between our two sister republics,” said Zuma.

South Africa and India enjoyed strong historical relations that had been formalised through various bilateral and multilateral mechanisms.

The two countries share membership of the Brics – Brazil, Russia, India, China and South Africa, IBSA – India, Brazil, South Africa, and the G20, among other multilateral groups

Rahul Gandhi, who led the Congress campaign, conceded defeat with his bloc grabbing just 59 seats, the worst ever performance for the party that has governed India for most of the time since independence in 1947. Smaller regional parties took 148 seats.

“The era of divisive politics is over; it’s time for unification,” Modi, 63, told a rally on Friday in Gujarat, the western state he has run since 2001. “I see the dawn of a new era for our country.”

The results boosted stocks and lifted the rupee as investors bet a stable government would make changes needed to bolster growth in the world’s largest democracy. While Modi’s opponents accused him of inflaming tensions between Hindus and a Muslim minority that stem from India’s founding in 1947, on the campaign trail he offered a message of economic development.

“It marks the beginning of a new era in Indian politics,” said BG Verghese, a visiting professor at the Centre for Policy Research in New Delhi and former aide to late prime minister Indira Gandhi. “This clean break offers a fresh look at basic policies – economic, security, social – that has to be a good thing.”

Prime Minister Manmohan Singh, in a farewell address on Saturday, wished Modi success and called on the nation to respect the results. “India is a far stronger country in every respect than it was a decade ago.”

The strong mandate spurred optimism that India would lead a recovery among the biggest emerging markets. During the campaign, the BJP lambasted Congress for jobless growth, promising in its manifesto to stem Asia’s second-fastest price gains and expedite foreign investment in most sectors except for multibrand retail.

Modi’s power in parliament won’t be unchecked. While the BJP and its allies will have a majority in the lower house, they have 61 of the 245 members in the upper house, where seats are distributed based on the strength of parties in state assemblies. The upper house must approve major legislation related to tax, foreign investment and constitutional changes.

India’s rupee surged past 59 to the dollar on Friday for the first time since July, while the Sensex index increased 0.9 percent to a record after swinging between a gain of 6.15 percent and a loss of 0.1 percent.

“The mandate signals the maturing of India’s democracy,” said DGA Khan, who teaches political science at the Banaras Hindu University in Uttar Pradesh. “Voters have backed the message of development instead of the caste preferences and parties who have exploited it for years.”

“India is back in business,” Andrew Holland, the chief executive at Ambit Investment Advisors, said. “Investors will now watch for the new government’s comments on policy issues such as foreign direct investment and the fiscal deficit to take further decisions, but I don’t see a massive downside.”

A stable government would open more opportunities for “big bang” changes, such as passing a goods and services tax, making it easier to acquire land and easing labour rules, said Sajjid Chinoy, a JPMorgan Chase economist. – Bloomberg

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